E-COMMERCE

E-Commerce refers to the paperless

exchange of business information using
Electronic Data Interchange, Electronic
Mail, Electronic Bulletin Boards,
Electronic Funds transfer and other
network-based technologies. It not only
automates manual processes and paper
transactions, but also helps organizations
move to a fully electronic environment and
change the way they operate.
Brief History
1970s: Electronic Funds Transfer (EFT)
Used by the banking industry to exchange
account information over secured networks
Late 1970s and early 1980s: Electronic Data
Interchange (EDI) for e-commerce within
companies
Used by businesses to transmit data from
one business to another
1990s: the World Wide Web on the Internet
provides easy-to-use technology for information
publishing and dissemination
Electronic data interchange: EDI can be
used to electronically transmit documents
such as purchase orders, invoices, shipping
notices, receiving advices, and other
standard business correspondence between
trading partners. EDI can also be used to
transmit financial information and
payments in electronic form. EDI is a way
of substituting electronic transactions for
paper ones.
DIFFERENCE BETWEEN TRADITIONAL COMMERCE
AND E-COMMERCE

1. Traditional Commerce : 
Traditional commerce refers to the commercial
transactions or exchange of information, buying or
selling product/services from person to person
without use of internet which is a older method of
business style and comes under traditional business.
Now a days people are not preferring this as it is time
taking and needs physical way of doing business. 
Example includes physical market/bazaar. 
2.E-commerce: 
E-commerce refers to the commercial transactions
or exchange of information, buying or selling
product/services electronically with the help of
internet which is a newer concept of business style
and comes under e-business. Now a days people are
preferring this as it is less time taking and does not
need physical way of doing business everything can
be done with laptop or smartphone and internet. 
Example includes online shopping sites. 
E-commerce Advantages
Being able to conduct business 24 x 7 x 365.
E-commerce systems can operate all day every
day
Access the global marketplace. The Internet
spans the world, and it is possible to do business
with any business or person who is connected to
the Internet.
Speed. Electronic communications allow
messages to traverse the world almost
instantaneously.
Marketspace. The market in which web-based
businesses operate is the global market.
Opportunity to reduce costs. The Internet
makes it very easy to ‘shop around’ for products
and services that may be cheaper or more
effective than we might otherwise settle for.
Computer platform-independent. ‘Many, if
not most, computers have the ability to
communicate via the Internet independent of
operating systems and hardware.
Efficient applications development
environment – ‘In many respects,
applications can be more efficiently
developed and distributed because the
can be built without regard to the
customer’s or the business partner’s
technology platform.
Allowing customer self service and
‘customer outsourcing’. People can
interact with businesses at any hour of the
day that it is convenient to them, and
because these interactions are initiated by
customers, the customers also provide a lot
of the data for the transaction that may
otherwise need to be entered by business
staff.
Stepping beyond borders to a global
view. Using aspects of e-commerce
technology can mean your business can
source and use products and services
provided by other businesses in other
countries.
A new marketing channel. The
Internet provides an important new
channel to sell to consumers.
 Disadvantages
Inability to touch and feel
merchandise, since the selling is online.
Online stores do not exist very long.
Many companies do not know exactly
how to set up a store, resulting in a
large group of annoyed & dissatisfied
customers.
Computer systems will never be
100% safe. Hackers intercept (money)
transactions & cause problems for both
consumers and companies that operate
on the Internet.
From the Indian context, internet
access is not widely available at
present.
Many persons go shopping for social
conducts, touch and feel the
product/item before using them. Hence,
e-commerce will de-personalize
transactions.
One of the major problems is security
of transactions on the Net. Spies or
hackers can steal and misuse credit card
numbers if not careful.
E – Commerce models:
Business to Business (B2B)
Business to Customers (B2C)
Business to Business (B2B)
B2B is the portion of the Internet market that
effects transactions between business operations and
their partners in marketing, sales, development,
manufacturing and support.
B2B transactions are called marketing transactions.
This includes:
Use of EDI and electronic mail for purchasing goods
& services.
Buying information and consulting services.

Submitting requests for proposals.

Receiving proposals.
B2B E-Commerce: - In this case, B2B
transactions between a vendor and a purchaser
of goods will be as under:
1. A Purchase Order document is entered in the
keyboard of a PC by the customer purchase
office and sent by email to the vendor in a
standard format for the purchase order
through Electronic Data Interchange
Standards.
2. The Purchase Order is stored in the vendor
database and is acknowledged electronically
through EDI. No manual transaction of
entering to PO at the vendor’s side.
3. The Vendor physically dispatches the items
and the delivery note is sent through EDI
standard.
4. The items received at the customer end will have a
printed delivery note accompanying them and is sent
to the inspection office at customer’s end, which
physically inspects items, received and compares with
the delivery note received electronically.
The accepted items note is electronically sent via
companies LAN to the stores office by the inspection
officer where as the rejected items note is sent
electronically to the purchase office. Similarly the
accepted and rejected items are sent physically to the
respective places.
5.The store office computer updates the
inventory automatically using the note
sent by inspection office. The items
accepted and taken into stock report is
sent via LAN to the accounts office,
which would be considered as an
authorized payment to the vendor.
B2B E-COMMERCE DIAGRAM: -
 Benefits of B2B Electronic Commerce: -
 (i) It allows you to replace a number of people like
accountants, warehouse managers with automated,
self-reliant, almost intelligent systems.
 (ii) It assists a firm to examine its existing business
practices closely, by taking out the ones that is not
functioning and replacing them with a new way of
doing business-efficiently, quickly and securely.
 (iii) B2B systems can substantially reduce cycle time
- by more than 50% sometimes and allow managers
to spend their time concentrating on what is
important-the business.
 (iv) B2B's prime constituents are supply chain
management and customer relationship management.
 Supply chain management allows:
 - To keep track of stock levels.
 - Respond to market demand and trends
quickly and efficiently,
 - Simplify the transaction processes, and
 - Lower operating costs
 Customer relationship management allows:
 - To understand your market,
 - Segment your customers,
 - Build customers loyalty, and
 - Ultimately, increase customer satisfaction.
 Disadvantages of B2B
 It is not cheap.
 Apart from site cost, there are running costs, not to mention the costs
on maintenance and labor.
 EPR (Enterprise Resource Planning) A model for building S/W in
which all the operations processes that impact resource management
use integrates S/W.
 Technology - a B2B system typically interfaces with other corporate
ERP systems such as inventory, accounting etc. The software used in
these systems, may not work with the latest Internet technologies, in
which case-the new system is to be switched on or get the old system
to embrace the new system. It is a difficult decision since a proper
evaluation is needed.
 Connecting the data in geographically diverse locations to create a
coherent whole ensuring that the system is working 24/7/365
(24hours a day, 7 days a week, 365 days a year) and adding
personalization features.
 Business to Consumer (B2C) Commerce: -
 It consists of 3 interrelationships: -
 Electronic commerce & technology
 Consumer behavior and choice
 Business processes and market place
competition
 Eg: Retailing on the World Wide Web.
B2C E-COMMERCE DIAGRAM: -
 Common Characteristics of these shops are: -
 Customers have access to the Internet. They operate
from the homes or work places and wish to purchase
items sold by the shops. For convenience sake, one can
shop at any time from the house and items will be
delivered to the house. Through the address of the shop
connected to the World Wide Web, customer operates.
 The customer typically uses a web browser such as
Netscape or Internet Explorer and enters the web
address of the shop. He selects the particular item by
keying it on his terminal out of the list of items
available. The shop also gives the contents page,
reviews items and cost of the item.
 If the customer wants more items, he points to
the list of item details shown on his screen using
his mouse and clicks. The vendors computer
enters the prices, adds them, provides discount if
any and shows the net amount payable. The
customer is then asked to enter his credit card
number and address to which the items are to be
shipped. An option is also available to the
customer to pay cash on delivery.
 If the payment is by credit card, the details of
the credit card is checked through bank.
 If the customers credit card is ok, the credit card
company authorizes the sale. The E-shop can now
proceed to fulfill the order.
 The customer now receives an order acknowledgement
from the e-shops computer for having accepted the
order and the customer is asked to send the shipping
instructions to enable the e – shops to decide on the
mode of transport and delivery periods.
 The e-shops normally does not have the items in
store. They order them from a distributor electronically,
on receipt of the same at vendor’s warehouse, the items
are packed and dispatched to the customer.
 The credit card company sends a bill to the customer
and credits the Vendors bank account the bills amount.
 Applications of e-commerce
 Retail stores such as book stores, music stores, toy stores
etc.
 Auction sites wherein an individual buyer and seller
participate in buying and selling goods.
 Cooperating businesses connected using their own private
telecommunication network carrying out transactions in a
semi-automated way.
 Services provided to customers from connected banks
such as deposits, payments, providing information on
status of an account.
 Railway, airlines, cinema theatre, for booking ticket
online and payment through credit cards or e-cash.
 Filling tax returns to the government & obtain an
immediate acknowledgement on real time.
 Electronic publishing to promote marketing,
advertising, sales and customer support.
 Web-based educational material allowing the
students to learn any time and at any place.